# Insurance (GIN) ## Title 23. Premium Financing ### Subtitle 4. Cancellation of Insurance Contract Under Power of Attorney #### Section 23-401 When in connection with a premium finance agreement a power of attorney or other authority to cancel an insurance contract on behalf of an insured is given to a premium finance company, the premium finance company may not cancel the insurance contract except in accordance with this subtitle. #### Section 23-401.1 (a) Subject to subsection (b) of this section, at the option of the insured a premium finance company may send any notice required under this subtitle by personal delivery, first-class mail, commercial delivery service, electronic mail, or facsimile transmission. (b) A premium finance company may send any notice required under this subtitle by electronic means only if the premium finance company meets the requirements for delivering a notice under Sec. 27-601.2 of this article. #### Section 23-402 (a) At least 10 days before canceling an insurance contract, a premium finance company shall deliver or mail to the insured written notice of intent to cancel the insurance contract unless the defaulted installment payment is received within the 10-day notice period. (b) For an automobile liability insurance contract, the notice of intent to cancel shall include a statement in clear and specific terms that if the insured fails to replace the automobile liability insurance within the 10-day notice period, Sec. 17-106 of the Transportation Article provides that uninsured motorist penalties be assessed and that all evidences of registration be surrendered to the Motor Vehicle Administration and that failure to surrender the evidences of registration may result in suspension of current and future registration privileges. (c) The cancellation of an insurance contract on the date stated in a notice of intent to cancel or a notice of cancellation is not superseded by a premium finance company's issuance of a subsequent notice of intent to cancel sent under this section or a notice of cancellation sent under Sec. 23-403 of this subtitle. #### Section 23-403 (a) (1) After the end of the notice period under Sec. 23-402(a) of this subtitle, the premium finance company may cancel the insurance contract by submitting to the insurer a notice of cancellation that specifies the effective date of the cancellation. (2) (i) The premium finance company shall deliver or mail a copy of the notice of cancellation to the insured at the last known address of the insured. (ii) With respect to commercial automobile, fire, or liability insurance, the premium finance company shall deliver the notice in accordance with the insured's request under Sec. 23-401.1 of this subtitle. (b) (1) If the insurer receives a notice of cancellation issued under subsection (a) of this section within 30 days after the effective date of cancellation specified in the notice, the insurer shall cancel the insurance contract effective on the date specified in the notice. (2) Subject to paragraph (3) of this subsection, if the insurer receives a notice of cancellation issued under subsection (a) of this section more than 30 days after the effective date of cancellation specified in the notice, the insurance contract shall be canceled effective on the date the insurer receives the notice. (3) If a premium finance company fails to meet the 30-day notice requirement under paragraph (1) of this subsection because the installment payment of the insured is dishonored after the effective date specified in the notice of cancellation, the dishonored payment is ineffective and the insurer may waive the 30-day notice requirement. (c) A cancellation under this section shall be made as if the notice of cancellation had been submitted by the insured, but without requiring the return of the policy. #### Section 23-403.1 If, within 15 business days after the date of written notice from a financial institution that the initial down payment for the coverage being financed has been dishonored, an insurer receives notice of the dishonor from an insurance producer or premium finance company, there is no valid insurance contract or insurance contracts, and the policy shall be voided. #### Section 23-404 (a) All statutory, regulatory, and contractual restrictions that provide that the insured may not cancel an insurance contract unless notice is given to a governmental agency, mortgagee, or other third party shall apply to a cancellation made under this subtitle. (b) If an insurer is required under subsection (a) of this section to give notice on behalf of itself or the insured, the insurer shall: (1) give notice to the governmental agency, mortgagee, or other third party; and (2) compute the effective date of cancellation from the day the insurer receives the notice of cancellation from the premium finance company. #### Section 23-405 (a) (1) Notwithstanding any other provision of this article, when an insurance contract is canceled, whether by a premium finance company, an insurer, or an insured, the insurer shall return any gross unearned premiums that are due under the insurance contract, computed pro rata, and excluding any expense constant, administrative fee, or any nonrefundable charge filed with and approved by the Commissioner, to the premium finance company for the account of the insured within a reasonable time not exceeding 45 days after: (i) receipt by the insurer of a notice of cancellation from the premium finance company or the insured; (ii) the date the insurer cancels the insurance contract; or (iii) with respect to commercial automobile, fire, or liability insurance, completion of any audit necessary to determine the amount of premium earned while the insurance contract was in force. (2) An audit under paragraph (1)(iii) of this subsection shall be performed within 45 days after the insurer receives the notice of cancellation. (b) (1) After the insurer returns to the premium finance company any gross unearned premiums that are due under the insurance contract, the premium finance company shall refund to the insured the amount of unearned premium that exceeds any amount due under the premium finance agreement. (2) A premium finance company need not make a refund to the insured if the amount of the refund would be less than $5. (c) Whenever an insurer, after receiving notice of the existence of a premium finance agreement, returns any unearned premiums to a person other than the premium finance company named in the premium finance agreement, the insurer shall be directly responsible to the premium finance company for all unearned premiums arising from the cancellation of the premium finance agreement. (d) (1) An insurer that fails to return any premium required under this section shall pay interest of 1% per month on the unearned premium that has not been returned until the unearned premium is returned. (2) Any payment under this subsection to the premium finance company shall be credited to the account of the insured. (e) An insurer may not deduct from any return premium any amount owed to the insurer by the insured under any other insurance contract. (f) An insurance producer shall return any gross unearned commissions, calculated as provided in subsection (a)(1) of this section, to an insurer within a reasonable period of time as required by the insurer. #### Section 23-406 Whenever an insurance contract is canceled in accordance with this subtitle, the premium finance company may not collect from an insured an amount due under the premium finance agreement that is less than $5. --- Md. Code Ann., Ins. (as displayed at mgaleg.maryland.gov, October 16, 2026)